Disclaimer

All views expressed on this site are my own and do not represent the opinions of any organisation/entity whatsoever with which I have been, am now, or will be affiliated !! The information based on this blog is based on my personal opinion and experience; it should not be considered professional financial investment advice.

The State of Play: Stocks and Shares

When the going gets tough, the tough get buying. The tweaked version of that hard-worn phrase could be an accurate way of describing some of those shrewd investors who buy shares in a downturn in the hope or belief that they will bounce back. Great successes can be achieved in this way. However, what do you do when the markets are on an upturn as the global indexes have signaled for close to five years in a row? Even when the studious foresee a continued momentum, there is a natural trepidation that the glass ceiling may suddenly bounce that trajectory.

Take a look at today’s Charts charts in the major Western economies. At the time of writing, the Dow Jones was rocketing above the 15,000 mark, The FTSE 100 continues its ascent at 6,500, the German DAX is at 8,250 and rising, and the French CAC 40 is above 3,950. The Asian market is more mixed. Japan‘s Nikkei recently hit a near five-year high, while China’s exports grew more than anticipated in April, easing a few of the concerns of a perceived weak recovery from the world’s second biggest economy.

Is Now the Time to Buy?

For those investors with money in play, would now be a good time to sell? Or is this a time for holding tight? And how about those prospective investors sitting on the sidelines? Some UK forecasters believe share values may continue to rise until 2016. For those soon-to-be investors gains should be considered over a five to ten year period, minimum. The simple reason being that stock markets are always open to volatility and the greater timespan you allow for gains, the more likely the investment will overcome difficult periods and give a truer indication of their performance.

The US currently practices quantitative easing and that will continue to help their share price. At some point, however, they will stop printing money and when they do that will surely affect the indexes. However, there are other aspects to consider which make buying shares a good option. Presently, interest rates are at historic lows and with inflation targeting an ongoing concern, it’s likely to remain so. That means buying shares can be a better option than stashing cash. In the UK savers are able to purchase shares on one platform which enables account holders to invest money tax free, though fees are applicable and can vary significantly so it’s not easy finding the best best stocks and shares ISA
It’s a useful marketplace for lessening the tax liability of shares and making savings active. It’s just a small part of an industry which is making share buying more accessible and easier to practice.

It’s Wise to Spread the Risk

Whether via a pooled or personally handpicked investment, there is a tried and tested way of managing uncertainty: setting up a mixed portfolio. Spreading the bet lessens the risk of succumbing to the troughs of market turmoil. It’s particularly wise to buffer the risk at a time when markets have been on a consistent rise as they have been for a number of years.

A whole industry has grown to help provide investors with mixed asset purchasing, but increasingly people are going it alone. That’s partly due to the increasing accessibility of in-depth market data via various online services.

In lessening the risk, it’s important to buy shares in different sectors and across different countries. A lot of investors are put off weak currencies, and that can be a mistake. Gains can still be made from companies based in weak economies. The issue is whether or not the company in question is reliant upon the domestic market. If it is, then that is certainly a concern. Ireland host many brands performing overseas which are worth a look. In Greece, shares can be picked up in a company like Coca Cola Hellenic safe in the knowledge that it’s not reliant upon the sovereign states economic performance.

While sectors like pharmaceuticals, oil, energy and drinks are promising at this moment, it would be foolhardy to rush in creating your portfolio. Build it gradually over a six-month period to avoid becoming the victim of bad timing. The less decisions you make, the better: in markets patience is a virtue and short term speculation is far riskier than long term planning.

Finally, if your investment has increased in value, there’s nothing wrong with taking the profit. Ultimately, that’s probably why you bought the shares in the first place.